Refinance, sell, stay the course?

[Tyler Roberts]

Hello, I’m seeking advice, methods, reality check, whatever it may be.

We currently own two rental properties (details below) and are ourselves renting a place to live in ($2350/month). We have $100k cash right now and we're trying to figure out if it's worth it to put the cash we have into refinancing Property 2 based on income generated, decreased value, etc. We did live in it for one year to satisfy the FHA loan and then moved out, so unfortunately it would have to be refinanced as an investment property with worse rates (8.1%) and higher LTV (25%).

We’d also like to buy a house to move into in the near future and of course dropping $100k of savings into property 2 would delay that.

Are there other options I’m missing?

Property 1: 4/3 LTR

Current Value: $475k

Purchase Price: $363k

Down payment: $40k (30 year conventional)

Interest Rate: 2.75%

Remaining Balance: $294k

Mortgage payment: $2369

AVG revenue: $2775

Property 2: Duplex - 3/2 House Airbnb & Detached studio apt 12mo lease

Current Value: hopefully within $575k-$600k

Purchase Price: $591k (appraised at $599k)

Down payment: $30k (30 year FHA)

Interest Rate: 6.125%

Remaining Balance: $552k

Mortgage payment: $5041 (including $362 PIM)

AVG monthly utilities: $385 (full year avg)

AVG monthly revenue: $5261 (full year avg airbnb + $1650/month from apt)

[Ty Coutts]

Hello Tyler,

For a more short-term strategy, I would consider holding off on Refinancing Property 2. Given the high interest rates and the need for additional cash, it might be better to wait until market conditions improve. Consider using the $100,000 as a down payment for a new primary residence. This would reduce your monthly living expenses and allow you to build equity. Explore FHA or conventional loans based on your eligibility and current market rates.

For a medium/longer term strategy, keep an eye on interest rates for potential refinancing opportunities for Property 2 when rates are more favorable. Focus on building equity in your new primary residence and continue to manage your rental properties efficiently. Once you have stabilized your primary residence and rental properties, consider additional real estate investments using the equity you build.

I hope this helps!